ROAD FINANCE

HC Deb 30 July 1954 vol 531 cc968-93

4.37 p.m.

Sir Gurney Braithwaite (Bristol, North-West)

When you were good enough, Mr. Speaker, to allocate an hour of today's Sitting to the topic of road finance. I immediately got in touch with the Financial Secretary to the Treasury by letter, giving him an indication of the line which I propose to pursue and intimating that I should be grateful for his attendance.

My right hon. Friend told me orally that he did not think it was a matter which the Treasury could take, but that it fell properly upon the shoulders of the Minister of Transport and Civil Aviation. It is perhaps poetic justice, therefore, that since then my right hon. Friend has found himself Minister of Transport and Civil Aviation. Perhaps I may take this opportunity of asking his Parliamentary Secretary, for whose attendance I am grateful, to convey to my right hon. Friend my congratulations, and I am sure those of the House in general, and our best wishes for a successful period of administration.

We have recently dealt with the final stages of the Finance Bill of the year, founded upon the Budget introduced by the Chancellor of the Exchequer last April, of which the chief feature, I think hon. Members will agree, was the provision for investment allowances for industry—a proposal which met with general approval, although there were, of course, differences of opinion during Committee as to the incidence of this relief. Some hon. Members opposite took the view that the larger industries were benefiting unduly at the expense of the smaller. Be that as it may, there was no difference between us as to the value and the importance of that step.

Production has increased and is increasing, but I suggest to the House that the development of our highways communications is a necessary corollary to it. After all, much of the effort which is made in the factories and elsewhere is wasted when the products have to be transported across an inefficient piece of industrial equipment, namely, our road system.

It is a lamentable fact—and I shall show the reasons for it, which in my view are largely unavoidable—that up and down the country today, North and South, East and West, there is not a single trunk route adequate to the vastly increased traffic now forced to use it. At this time of the year, when as hon. Members we are all looking forward to an escape from our duties for a few weeks, as are many of our fellow citizens, these conditions are aggravated by the summer holiday pressure. It may be that some frustrated motorists waiting at bottlenecks, will if they switch on their wireless sets, catch one or two snatches of this debate.

During this Parliament, Her Majesty's Government have twice accepted Motions calling for increased road expenditure, but have given no indication as to when this will be implemented. I submit, with the greatest respect, to the Parliamentary Secretary that our national reluctance to appreciate the vital part played by roads in industrial production is in sharp contrast to our attitude to other industrial equipment. The provision of new equipment, including buildings, is encouraged, as I would remind the House, by wise investment allowances. Yet the importance to industrial production of essential equipment is surely not conditional on which side of the factory gate it happens to be.

What our out-of-date roads are costing the nation is difficult to compute. I can tell the House one thing. On the trunk routes it is estimated that a motorway would reduce operating costs by as much as £25,000 per mile per year. That is certainly a formidable figure. I call in aid no less a personage than my right hon. and learned Friend the Secretary of State for the Home Department, who, on 11th November, 1948, speaking on the Second Reading of the Special Roads Bill, said this: … special roads should be allowed to take their place in the capital development queue."—[OFFICIAL REPORT, 11th November, 1948; Vol. 457, c. 1755.] It so happens that another speaker in that debate was the Parliamentary Secretary, who delivered himself in far less enthusiastic language as to the importance of road transport. It would not be fair to quote him on this occasion because he could not have foreseen then that he would be the holder of his present office, and in any case, "Doe don't eat dog." The fact remains that the Home Secretary called attention to the importance of special roads in our capital development "queue," as he called it, and this was six years ago.

Since then, the Parliamentary Secretary will agree, I am sure, that the queue has shortened and many priorities have now been cleared. I am, therefore, here to submit that the time is ripe for road development to be first in the queue. It has been estimated that when the Government's present road programme reaches its plateau level some four years from now, the total expenditure from Exchequer and local authority sources will reach £100 million a year, and, of course, a vast percentage of that figure will have to be devoted to maintenance. New construction and major improvements will have only a minor share of the total expenditure.

It is expected that at plateau level the total outlay on new construction and major improvement in the present programme will be some £18 million a year. I call attention to that figure because, oddly enough, it is precisely the same figure in cash as we spent for these purposes in the financial year 1938–39, the last full year before the outbreak of the war.

Since then, there has been virtually no expenditure on new road construction, but during the same period vehicle registrations have practically doubled. Thus, when the Government's road programme reaches its maximum, since costs are now 2½ times those of pre-war, it follows that only a fraction of what was done in 1938–39 will be achieved, even allowing for the improved efforts of road construction which are now available.

It would not be difficult to advance arguments, had we more time, to show that the necessary roads in terms of productivity possess an earning capacity. We are often told that the nationalised industries have an earning capacity, but there can be no denying that congestion and delay on the roads cause a waste of time and effort which cannot be overtaken.

I want now to return to the proposition which I made in the House nearly six months ago for a £500 million loan over a period of 30 years for the purpose of tackling this question, and I want to say a word about how this could be serviced. I appreciate that this is a Treasury matter. I shall not take it amiss if my hon. Friend makes no reference to it—it will be on record—but I should have liked someone from the Treasury to come along and pay a little attention to this matter. We had a representative of the Treasury on the Front Bench all day on education on Monday, but it appears that the only time the Treasury representatives flee from a stricken field is when we are discussing something financial. Therefore, I do not blame my hon. Friend if he cannot be forthcoming on this argument as to how we can provide the necessary servicing of a long-term loan for road purposes; that is a Treasury problem and a matter for Treasury decision.

Consumption of all forms of fuel by road users in recent years has totalled just over 2,000 million gallons every year. The total taxation on fuel, motor vehicle duties and the like, including Purchase Tax, amounts to £380 million a year. One penny of the present fuel Tax of 2s. 6d. per gallon yields £8½ million. And so, by providing, through the Consolidated Fund, a sum for road construction purposes equivalent to the revenue produced by 3½d. of the present Fuel Tax, an annual income of £30 million could be produced.

Thus the equivalent of a little over one-tenth of the present tax on fuel would provide a sufficient sum to service a £500 million road development loan which, if issued in blocks as and when the physical construction programme called for funds, and if issued even at the unduly high rate at present of 4 per cent.—although I am sure it could be done on a lower basis—would at its peak require a maximum sum of £29 million for interest and sinking fund purposes.

My right hon. Friend the recent Minister of Transport and Civil Aviation has said that this is a matter of budgetary policy. So it is, and that is why I was anxious to have a gentleman from the Treasury present. But precisely how the Government provide funds for a realistic road construction and improvement programme is, after all, immaterial—we do not mind; but if current revenue fails to deliver the goods, as fail it undoubtedly does, the urgency of the situation demands borrowing.

When I deployed this argument to the House in February, two ugly sisters were produced to horrify hon. Members: inflation and disruption. We were told that these proposals would mean an inflationary action and, said my hon. Friend the Parliamentary Secretary a little later, it would cause great disruption in the money market. The two ugly sisters, thanks to new frocks provided by Dior, in the person of the Chancellor of the Exchequer, and beauty treatment from Elizabeth Arden, in the person of the Minister of Fuel and Power, have both gone off to the ball looking really quite glamorous.

Three weeks ago today, on behalf of the gas and electricity industries, we passed a Bill giving them borrowing powers not to the tune of £500 million but to the tune of £900 million. The ugly sisters have become quite glamorous since my hon. Friend pointed to their hideous features while poor Cinderella still sat in rags by the fireside, the poor Cinderella of the highways.

Dr. H. Morgan (Warrington)

Why does the hon. Member not go to her rescue?

Sir G. Braithwaite

I was just going to say that I am comforted by my recollection of the story of Cinderella, for it ended happily. I am hoping that this may be the case too, because British credit has vastly improved under the wise administration of my right hon. Friend the Chancellor of the Exchequer. It is no good making this improvement in British credit if we do not use it. It is there. Let us make use of it.

I cannot, of course, expect more today from my hon. Friend the Parliamentary Secretary. I am most grateful to him for coming here to deal with this subject which is removed considerably from his Departmental duties. I know the speech my hon. Friend will make if only because I have made it myself on more than one occasion from that Box; but we want to go wider than that. The Ministry of Transport can do no more than use the money which Parliament votes. I am trying to get the reserves up to the front line as reinforcements and I say, let us use our improved British credit.

I cannot expect my hon. Friend to do more than give us an assurance that the new Minister, whom I wish well, will give this matter his urgent and sympathetic consideration. He has every consideration for doing so. He has been at the other end of the gun for three years, and if he does not know how to get round the Treasury nobody else does. He is also a young and active Minister and he can confront the Treasury with an ultimatum—that if they do not come across with the money his name will be Walker.

Perhaps my hon. Friend will be able to say that the new Minister will give urgent and sympathetic consideration to this problem as well as the highest priority as soon as the national finances permit. I conclude by respectfully submitting that the situation on this very day makes action possible here and now.

4.53 p.m.

Mr. Ernest Davies (Enfield, East)

I congratulate the hon. Member for Bristol, North-West (Sir G. Braithwaite) on raising this matter this afternoon, because it is the appropriate season in which to do so with so many motorists setting out on their holidays this weekend. This is a non-party issue. We can blame successive Ministers of different political colour for their failure to provide adequate finances for the arteries of the country. I would share in the congratulations which the hon. Member expressed to the new Minister of Transport. In the past, very much of the roads programme has been shipwrecked on the rocks of the Treasury. Now one of those rocks has shifted from Whitehall to Berkeley Square, and it may be that a channel will be open through which progress can be made.

I should like to deal mainly with one or two aspects of the problem in London, because I think in London in particular the advantages of financing road expenditure through the methods suggested by the hon. Member, namely, a road loan, would be very considerable indeed. I say that because London is suffering in particular at the present time from the failure of the Ministry to permit it to proceed according to its long-term plan. The London County Council produced a 10-year development plan which called for only £4 million per annum. That is not a considerable amount when one considers the size of the Metropolis and its great importance to the country and the Commonwealth.

Unfortunately, however, the Minister has refused to give the all-clear for a programme of works for some years ahead. He has authorised certain commitments for the current year, but he has not given any indication to the L.C.C. or to the Middlesex County Council as to those works which will be authorised over the next few years. As we all know, this development plan covers many long-needed improvements which, if carried out, would not only improve the flow of the traffic throughout the City, but would also add to its amenities.

Among the high priorities for which the L.C.C. has been pressing are the duplication of the Blackwall Tunnel, which is a had bottleneck in the East End of London; for the Hyde Park—Marble Arch boulevard, which would facilitate the flow of traffic from the north to the south and from the south to the north; and the removal of the bottleneck at Notting Hill Gate, which is one of the worst bottlenecks out of London.

Unfortunately the Minister of Transport has refused to say even whether these schemes will ever be carried out or whether they will receive a grant. Yet the waste of the traffic congestion and the slowing down in the flow of traffic is very great indeed. I saw some figures the other day to the effect that at Piccadilly Circus and at Hyde Park Corner in each case 900 vehicle man-hours a day are lost, which is a considerable amount.

The L.C.C. is ignorant of when it will be able to go ahead with its development plan and does not even know whether it should safeguard the improvements. By that, I mean that where it has planned for the improvements, if leases fall in or for other reasons property becomes available which ultimately will have to be acquired in order to carry out the development schemes, unless the L.C.C. obtains the go-ahead from the Ministry that the grant will be available, it is faced with the dilemma of having to decide for itself whether it will spend its own funds without grant for the purpose of safeguarding these improvements.

I can give the House a current instance on which the L.C.C. has had to decide recently. It concerns St. Giles Circus, which is the intersection at Tottenham Court Road, Charing Cross Road and Oxford Street. There a really ridiculous position has arisen. Originally this scheme for making a circus at the junction there was in the second-year development plan of the L.C.C., but the Minister suggested that this was so important that it should be put into the first 10-year plan, and that was done. Recently the Minister has said that he is anxious that the scheme shall be safeguarded. This means that property which has recently come into the market shall be purchased by the L.C.C. so that the improvements can be safeguarded. Yet, although the Minister has expressed that view, he refuses to forecast the date when the work can be done or even to commit himself to making a grant towards those improvements.

I apologise to the Parliamentary Secretary because I have not given him notice of this matter—and I do not expect an answer off-hand—but I would add, that, in regard to safeguarding improvements without Treasury grant, the L.C.C. has had to spend £3 million on acquiring often small sites, where considerable improvements could take place but for which the Council has received no grant. The property is then often frozen. Road works have to be done and temporary paving put down, but major improvements which could be done at a comparatively small additional cost if only a grant were available cannot be carried out.

Unfortunately, London is in the dark about its future. This year, commitments for which Exchequer grants are to be given cover only just over £2 million in London and just over £1 million in Middlesex. The larger part of these commitments is for the Cromwell Road extension, which is a very important and necessary scheme. Apart from that, the only schemes to which London has been so far committed is the small improvements in the Piccadilly-Swallow Street area and the small improvement on Rochester Row.

If only the financing of expenditure on roads could come out of capital below the line rather than out of revenue it would be possible for the Ministry to allow the L.C.C., Middlesex County Council and all road authorities in the county to plan ahead. The great advantage of that would be that it could do so in an overall way and not proceed on an ad hoc basis as is being done at present. I hope, therefore, that we shall receive today from the Joint Parliamentary Secretary a clear answer to the question why the Treasury refuses to accept the suggestion of a road loan. In our debates so far, no real explanation has been given to us. As the hon. Member for Bristol, North-West said, certain excuses have been produced which are no longer valid in view of the action which the Government have taken with regard to the electricity and gas industries.

Something must be done not only in London but with regard to the whole of the road programme throughout the country, and some way of financing the programme must be found. If the Treasury refuses to finance it out of the Revenue, it must give serious consideration to this alternative. Something must be done in London, because London is not only the largest city in the world and the capital of this country but is the centre of the Commonwealth and, as such, should give an example of modernity to the extent which its historical position makes possible.

Instead of that, I am afraid that when a visitor comes here he is impressed by our great historical monuments, by our parks, even by our policemen and our underground railways, but he is shocked at the congestion that he finds on the streets and the slow flow of our traffic and is appalled at the inadequacy of our roads and the slowness with which we are bringing them up-to-date. I am afraid that he will be even more shocked in a few years' time unless something is done. Because of the inadequacy of our road programme, London has become the slowest city in Europe. I ask the Joint Parliamentary Secretary to take back to the new Minister who has recently come from the Treasury our wish that in his new position he will look afresh at the financing of the road programme with a view to increasing it to a level which this country can afford.

5.5 p.m.

Mr. Harmar Nicholls (Peterborough)

My hon. Friend the Member for Bristol, North-West (Sir G. Braithwaite) and the hon. Member for Enfield, East (Mr. Ernest Davies) have proved a very good team in opening a debate on roads once again. My hon. Friend gave a broad outline of the need throughout the country and of the effect that delay in meeting his plea will have on road safety and on industry. The hon. Member for Enfield, East pinpointed the case in London. The general case and the particular case seem to me to be undeniable. I hope that the Joint Parliamentary Secretary will use all his efforts to see that this case, which is largely the case of his own Department, is presented successfully.

Once again, I would refer to the regularity with which this matter is raised in this House. Parliament, above all else, is a sounding board. Time and again at Question time and during debates this matter is raised and urged, backed up on every occasion with figures which are really significant and with the promise that the outcome would be very well worth while. It is unnecessary to tell the Parliamentary Secretary of the need for this from the road safety point of view. His Department is well aware of it because it has announced it on so many occasions. Quite apart from the loss of lives, the cost of road accidents today runs into more than £100 million a year. It is established that quite a big proportion of road accidents could be prevented if we had a better road system.

This is not the only answer to the problem of road accidents, but it is a big and important part of the answer and one which, I know, has the full support and sympathy of my hon. Friend who is representing the Government on the Treasury Bench. I think it is also accepted on grounds of industrial efficiency. We have had evidence, which cannot be overlooked, that hundreds of millions of pounds a year are added to production costs because of the delay on the roads and the wasted fuel being turned into smoke whilst vehicles stand in long queues because of some of the bottlenecks to which the hon. Member for Enfield, East referred. It is quite obvious that it would be to the good of the country if these improvements could be made in a way which would reach very great proportions. Why is the power not exercised?

In the debate a few weeks ago I acknowledged the fact that the announcement of the then Minister of Transport showed a considerable improvement on former years—three times the amount was being spent as was spent two years ago—but obviously that was not enough. Why do the Treasury appear to be unconvinced? It cannot be because of the strength of the case; that, I am certain, has been pressed on it from all quarters. It cannot be shortage of labour. At one time I thought it might be shortage of labour and materials which was holding back development, but that is not so now.

The statement on 22nd February by Sir George Burt, President of the Federation and Civil Engineering Contractors, has never been denied. His statement really does dispose of the suggestion that there is a shortage of labour and materials. The statement was: The civil engineering industry has immediately available the necessary skill and experienced personnel and the latest types of plant to undertake this task of modernising and improving Britain's highway system and it is ready and waiting for the signal to go ahead. Never before has the civil engineering industry been so well equipped and prepared to carry out road construction work on a large scale. If there were ever a shortage that cannot be so now, unless that statement by Sir George Burt can be gainsaid. If it is ever attempted to say that such an authoritative person is not sure of his facts, nothing short of a national inquiry inside the Department with evidence from all quarters would satisfy me.

So the reason cannot be shortage of equipment, and is only finance. We know that finance is always a big question in any undertaking in business. If it is the case that the need has been made out it is for the Treasury to decide for itself how it gets the money. I see the weakness in asking for something which will cost money, when money is in short supply, if one does not oneself give an answer; and we have had two answers submitted to us in this House.

We have the answer given by my hon. Friend of a £500 million loan for 30 years. No really adequate reason has been given why that cannot be done. If there is an answer to that there is still the scheme put forward by my noble Friend the Member for Dorset, South (Viscount Hinchingbrooke). He has said, "If you do not want to raise a loan let us have finance by under-the-line expenditure." The good that will come from this work will go on for many years and it is not unreasonable that the cost of it should be paid for in future years.

These are the two ways put forward in this House of raising money—either a loan or under-the-line expenditure, and until there has been a really adequate answer why either or neither can be undertaken I feel that we are justified in asking again and again for the Treasury to give support to the Parliamentary Secretary's Department in respect of the case which, I suspect, my hon. Friend the Joint Parliamentary Secretary has tried hard behind the scenes to put to it. All the Ministries, not only the Ministry of Transport, want better roads.

The Home Secretary surely wants better roads to relieve the strain on the police. Surely the Minister of Labour wants better roads. We have a very good case so far as the employment figures are concerned, but the one thing that could cause unemployment is that we might lose our markets because we are priced out of world markets as a result of the cost of transport from the factory to the ports.

The Board of Trade should join in this co-ordinated effort to impress on the Treasury that it really must not be so stiff-necked about this matter, because the success of the Board of Trade depends on our having a successful industry, which, over the next five or 10 years, really depends on preventing chaos developing due to the number of vehicles on the road being in excess of the capacity of the roads to take them.

Once again I add my voice to the appeal to the Joint Parliamentary Secretary to go all out, with his new Minister, whom we all wish well, to stand and fight hard with the Treasury on this vital question. I am convinced that if they win they will be very good friends to the Treasury in helping to bring in a greater return to the Revenue through the extra prosperity that will flow from dealing adequately with this question.

5.13 p.m.

Mr. Graham Page (Crosby)

I wish to lend my wholehearted support to the proposition of my hon. Friend the Member for Bristol, North-West (Sir G. Braithwaite) for this new approach to road finance and to improvements to the roads. He has put forward the argument on the basis that unless there is this new approach and this increased expenditure upon the roads we shall soon reach economic strangulation.

My hon. Friend the Member for Peterborough (Mr. H. Nicholls) touched upon another good reason why increased expenditure is so very necessary on the roads, a reason which I wish to emphasise, stress and underline; that is, until we spend a greater amount on the roads and adopt some new approach towards the improvement of the roads we shall not save the life and limb which is now being so tragically lost on the roads. I do not mean by that that every road improvement necessarily brings with it road safety. When one considers road improvements from the point of view of making the flow of traffic smoother, it may be that unless care is exercised we shall be making the roads more dangerous.

I hope it will be realised, however, that a good reason for greater expenditure on the roads is safety, and that if it is found possible to finance road improvements by the method suggested by my hon. Friend a great part of that finance will be devoted to road safety measures.

On previous occasions in this House I have had the privilege of suggesting certain precautionary measures, which I think deserve priority, such as non-skid surfaces, refuges and press-button lights. There are others which other hon. Members may think should have greater priority. But the important thing is that we should give these road safety measures a real priority in the expenditure of money on the roads, even though perhaps they seem economically inconvenient to the flow of traffic, for, after all, road accidents are the greatest economic inconvenience from the long-term point of view.

I would follow through the argument which I am endeavouring to put, that a great proportion of the expenditure should be on road safety measures by saying that there should be some form of guardianship of the funds to be expended. There should be a guardian of road safety. I am not sure that the Ministry of Transport is the correct body to look after the expenditure of money on the roads from the road safety point of view. The very name of the Ministry suggests that its objective is to improve the roads for the flow of traffic, to make for an easier and more economic transport system; and in achieving that object it may at times come into direct conflict with the objective of safety on the roads.

There are also other Ministries concerned. My hon. Friend the Member for Peterborough mentioned the Home Office, which is deeply concerned about road safety matters. The Home Office is responsible for enforcing the traffic laws, and partially for the police who administer them. The Ministry of Housing and Local Government is responsible for the roads under the care of local authorities, and partially for the police forces which are under local authorities. There are also the Ministry of Education, under whose auspices such good work has been done in educating school children, and the Ministry of Health, which must necessarily be concerned with the overcrowd- ing of hospitals by those injured in road accidents. There are more Ministries involved in road safety matters than the Ministry of Transport.

If there is to be this increased expenditure on the roads, I would ask, also, that there be an independent guardian of road safety measures to see that at least a quarter of the money spent on road improvements is directly spent on road safety matters. There is in existence under the Ministry of Transport a body which would fit the bill if it were divorced from the Ministry. I refer to the Minister's Road Safety Committee, which has done such good work in the past. Were that an independent body under a strong and independent chairman whom other Ministries could consult, and to whom other Ministries could represent road safety matters, I think it would bring great benefit.

I would go further and give such a body the power to veto expenditure on road improvement where it did not comply with real road safety measures. I would put the Road Research Laboratory under its care, I believe that with the assistance of that Laboratory, and with this new financial approach of a road loan and increased finance to be applied to road improvement, money could be spent in the best possible way in order to prevent lives from being lost on our roads. The case has undoubtedly been made out time and again, in this House and outside, for the expenditure of money on the roads, not only for economic but for safety purposes. I add my voice once again to those which support that plea.

5.20 p.m.

Viscount Hinchingbrooke (Dorset, South)

As usual in all road debates in this Parliament, and even before that, this discussion has been one of great interest. Hon. Members have contributed, as they always do, from their direct experience. It has always seemed to me that there were three, and only three, reasons why we have not had greater capital expenditure upon the roads. One could go back almost to before the war and see that those reasons prevailed then—at least, one or two of them did.

The first, which is a post-war reason, is the fear of inflation. That was a very real fear during the time when a Socialist Minister of Transport introduced what is now the Special Roads Act. That provided for large strategic highways, and it was a good Act when Parliament had finished with it. It is now in the pigeonholes of the Ministry. It has never been implemented.

It was not implemented because the Government which introduced it made financial conditions essential for its success quite impossible. Those conditions no longer prevail, thanks to the wise administration of my right hon. Friend the Chancellor of the Exchequer.

Mr. Ernest Davies

The noble Lord is over-simplifying.

Viscount Hinchingbrooke

When speeches have to be brief simplication becomes a virtue.

Mr. Davies

But the statement is not accurate.

Viscount Hinchingbrooke

Thanks to the wise administration of my right hon. Friend the Chancellor of the Exchequer, the inflationary situation has now been held and I think that on that account we can look forward very shortly to a road development programme of a very much larger order than any we have had since the war.

The second reason why we have not had a road programme of substance is a more sinister reason. I am afraid that in the Treasury there still are high civil servants who are infected with this reason. I do not think that that applies to my right hon. Friend the Chancellor of the Exchequer because I have never heard him give vent to these views, and I have not heard them from the former Financial Secretary to the Treasury, whom we are delighted to congratulate upon his new appointment to the Ministry of Transport.

However, there are those people in high financial circles in the Treasury who still adhere to the ancient views of people like Lord Runciman, before the war, who said that roads were a kind of industrial activity which should be held in reserve for a situation of unemployment and deflation. I am certain that there are still people about who think in terms of picks and shovels and manpower hauled in from the labour exchange at the last moment frantically digging holes in the ground in order to lay down roads as a means of maintaining full employment and absorbing the surplus money that exists.

For goodness' sake, let those people consult all the high State documents of both parties since the war and digest them, and exorcise from themselves any vestige of feeling of this sort. Since the war both parties have established the main conditions under which full employment is to be maintained and the economic means by which that is to be done. It is apparent now that the reorganisation and improvement of the roads must, and should, go fully pari passu with the development of all other forms of industry and the capitalisation of all other types of the assets of the nation if the public interest is to be fully served.

The third reason why we have not had a road development programme since the war is much the most fundamental. It is because of the petty cash book basis upon which public accounting is done. There is no time now to develop that argument. I have done it on previous occasions. We all know it to be true. The nation extracts its money in taxation from the people and it spends it on capital and on current expenditure. There is, it is true, a great deal of borrowing but that borrowing in the past has been associated with loans, grants overseas—aspects of accounting which, for reasons dating right back to the past have always been so regarded, but the State has only just begun to make an inroad into the provision of loan expenditure for the creation and improvement of the nation's capital assets.

If we look at the below-the-line expenditure in the Budget we find the very large figure of £400 million to £500 million allocated to local authorities for housing purposes. That is the beginning—there are a few other items as well—but that below-the-line accounting method must be expanded far more fully than hitherto if we are to get the kind of road development programme which we want.

The argument immediately comes back from the Treasury, "Oh, you cannot do this for roads, because roads not do earn anything. After all, we are giving the local authorities loans for housing, but people pay rents so money is earned." We have to look much further than that. We have to realise that in so far as the nation develops or improves any of its physical assets which earn an income for the nation, recognisable in money terms, loans are permissible as a means of providing capital. Roads come within that category.

I have some hopes that this theory is becoming acceptable. My hon. Friends and I have done a little work on it and have made such representations as we might. I hope very much—and I have reason for saying that it is a confident hope—that in the next Budget some further recognition will be given to this principle. I have not, therefore, the slightest doubt in saying that in my view a new policy of road development is coming—and coming soon. I hope very much that my hon. Friend will be able to say that the Ministry is fully prepared for this new policy to arrive, and for it to be implemented.

There is no lack of demand. We have only to listen to road debates in this House to hear hon. Members indulging, on behalf of their constituents, in what is loosely called a "dutch auction" in order to get their plans approved by the Ministry of Transport. I am quite confident that the organisation, the machinery, at this Ministry is good enough and skilfully enough devised to be able, when the time comes, to administer this scheme fairly on behalf of all areas.

There is one factor in regard to which I sometimes wonder whether the Ministry is prepared. I always think it a great pity when my children start eating chocolates an hour before they have a whacking good meal. I am inclined to think that a number of road ventures which are now going forward based upon the existing policy may prove very frustrating by the time the new policy comes into effect. Let me quote as one example the kerbing of the roads which is now proceeding. The money allowed is small, the schemes are small. The Ministry of Transport is telling local authorities, "You can only do very simple and inexpensive things." Divisional road engineers, therefore, are going along the roads seeing whether, very cheaply, they can put kerbing on the existing roads.

If we are to get fairly swift provision of new finance enabling the main roads to be considerably broadened the current policy of kerbing these narrow 30-foot stretches is quite fantastic. I should like to ask my hon. Friend whether he will consider this and see whether, in appropriate cases, it cannot be stopped now before the new programme gets under way. Of course, where it is being done on stretches of road which will be duplicated as an arterial highway there is nothing wrong. The kerbs are then put on the existing road in the knowledge that, parallel with that road, a second one-way traffic road will be built in time.

I cannot object to that policy going forward, say, in my constituency—in South Dorset—but I am afraid that it is being done on cross-country roads where there is no question of a dual carriageway. In other cases, what will now occur is that there will be financial provision later to widen those roads so that they may become three-lane instead of two-lane traffic roads. I would ask my hon. Friend to look into that and other policies of the same kind which I could name were there more time, to see whether it would not be wise, in anticipation of the great new scheme for road improvement coming off—as I am sure it will in a year or so—to discontinue some of these current projects.

I should like to end by saying that it will be a great feather in the cap of Her Majesty's Government if, in addition to the splendid works they are carrying out on behalf of the people of this country in every field of economic and social activity, they can add this new policy for making the roads better and safer.

5.34 p.m.

The Parliamentary Secretary to the Ministry of Transport and Civil Aviation (Mr. Hugh Molson)

I should like to begin by expressing on behalf of my right hon. Friend the gratification that he will feel at the kind words that have been said on both sides of the House on his accession to his new and responsible office.

I am sorry, of course, that my hon. Friend the Member for Bristol, North-West (Sir G. Braithwaite) should be disappointed that there is not a representative of the Treasury here, but I should have thought that during the time that he was a member of the Government he would have realised that the Government always speak with one voice, and that it is completely wrong to ask that, in defending the expenditure of one of the Departments, the Treasury should be represented and should take part in a debate upon a matter of that kind. My right hon. Friend is responsible in his new capacity both for the extent and the limitations of the road programme as it is at the present time, and it is not right that the responsibility should be put anywhere else.

This is really the fourth of a series of debates in which the whole question of the financing from loan of roadworks has been raised. On 15th February my hon. Friend and predecessor came out with a proposal for the floating of a large loan of £500 million. On the next occasion I gave a considered answer to his suggestion, and did not perhaps deal as fully and faithfully as I might have done with the more modest proposals put forward by my hon. Friend the Member for Peterborough (Mr. H. Nicholls) and the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke).

I am a little surprised that my hon. Friend and predecessor should be raising this matter again in rather the same form that he did on the last occasion. The "Economist" on 5th June thought that I had carefully evaded answering the closely reasoned arguments of my hon. Friend the Member for Peterborough and had chosen the proposals of my hon. Friend the Member for Bristol, North-West as an Aunt Sally that is fairly easy to knock down.

On this occasion I will try to deal with both the alternative suggestions that have been made. On that occasion my hon. Friend suggested that the £500 million should be raised for roads and for roads alone. He said: The prospectus issued by the Government, a trustee security, would be a contract, and this money-box could not be rifled or raided. No Chancellor since 1926 has been able to keep his fingers out of the now defunct Road Fund, but no Chancellor could dip his fingers into this loan. … If those words mean anything at all, they mean that the Treasury would not be allowed, after raising this £500 million, to use that money for any other purpose than roads. But earlier in his speech my hon. Friend had already indicated that it would take 30 years before that sum of money could be spent. He said: … no Chancellor of any party or any Government could allocate the whole of the proceeds of motor and petrol taxation to road works, if only for the reason that it could not be spent even if he did."—[OFFICIAL REPORT, 15th February, 1954; Vol. 523, cc. 1673 and 1675.] We are, therefore, left with the mediæval conception of a money-box into which a large sum of money is put, but which cannot all be spent until 30 years have passed.

Mr. Ernest Davies

It need not all be raised at once.

Mr. Molson

That was the alteration which my hon. Friend made in his proposals today, and I am very glad indeed to think that he has apparently been studying the reply I gave on a previous occasion. Speaking on 28th May, I expressed the view that To take £500 million out of the money market for this special purpose would quite obviously cause a serious disruption of the money market and would embarrass the Treasury and local authorities in raising funds for all the other purposes of central and local government."—[OFFICIAL REPORT, 28th May, 1954; Vol. 528, c. 860.] I stand firmly by that.

Mr. Davies

What about gas and electricity and the raising of £900 million?

Mr. Molson

I am coming to deal with that point. I cannot answer all arguments simultaneously.

Mr. Davies

No, but we do not want the hon. Gentleman to forget it.

Mr. Molson

I understand that even before a loan of £50 million is raised there is careful inquiry and preparation of the money market to ensure that it can be absorbed. If this were not done it would be necessary to offer more advantageous terms than can be obtained by buying existing Gilt Edged securities, and the effect of the new loan would be that the yield of all existing Gilt Edged securities would be adversely affected.

On 9th July my hon. Friend the Member for Bristol, North-West was at pains to ridicule my statement. He referred first to the fact that three days after my speech, on 31st May, the Treasury successfully carried out a conversion scheme of £300 million without any difficulty. He was careful to add in the next sentence that this was conversion and that no new money was required; but because no new money was required the comparison has no validity whatever. He then went on to refer to the Gas and Electricity (Borrowing Powers) Act which gives power for the raising of £900 million of new money, to which the hon. Member for Enfield, East (Mr. Ernest Davies) has again been drawing my attention. My hon. Friend asked the rhetorical question: Why should £500 million cause destruction on 28th May and £900 million construction on 9th July? The House is entitled to know."—[OFFICIAL REPORT, 9th July, 1954; Vol. 529, c. 2528.] I will tell the House. That Act authorises the raising of £900 million over a period of five years as and when required. Again, there is no validity in the comparison whatever.

I now come to a further point in what I said in the statement to which my hon. Friend has taken exception. I was careful to say that not only would it be disruptive of the money market but that it would also affect the power of the Government and local authorities to borrow money for other Government purposes. Let us be quite clear about this. What is being suggested is that this additional sum of money should be raised on the market in order to increase the rate at which road construction is taking place. It has not been suggested in any of the speeches made today—and I entirely agree—that this should he done at the expense of the development, modernisation and extension of industry, of electricity, of gas or of any of the other services which are vital needs in a modern and developing community.

The total savings of the nation are estimated at rather over £2,000 million a year. In whatever way a great programme of road construction is financed, it must ultimately be financed out of the total economic production of the country. If it were proposed, in addition to the existing loan programme of the Government and of local authorities for housing, education, electricity, gas and everything else, to impose a further large programme of borrowing in order to increase the road development programme it would necessitate an increase in the savings of the people of the country.

Since my hon. Friend's speech of 15th February—and I hope possibly as a result of the criticism which I then made of his proposals—other and, I think, more practical proposals for financing the building of roads out of borrowed money have been put forward. They were repeated today, I was interested to note, by my hon. Friend the Member for Peterborough and by the noble Lord the Member for Dorset, South. It has been suggested that if we are to have a sufficient scale of road construction without adding unduly to the burden on the taxpayer, then at any rate part of the construction could be treated as below the line expenditure.

I do not think anyone would argue that there is a complete difference in character between building roads and building houses and that it would never, in any circumstance, be proper to charge road construction below the line whereas it would be proper to do it in the case of housing. I fully recognise that in both cases it partakes of the nature of a capital asset which will, we hope, be of permanent value to the country.

With the economy at full stretch, in 1953, unemployment was lower than in any year of peacetime since records have been kept. It does not seem to be an appropriate moment, therefore, to adopt a method of financing road construction which is, and was frankly admitted by the hon. Baronet on 15th February to be, inflationary in its effect.

Sir G. Braithwaite

I have listened with very great care to the arguments which my hon. Friend has been deploying. Are we to understand that this Conservative Government, having surveyed the whole field of the savings of the people, have come to the conclusion that £900 million of them can be gobbled up in five years by the nationalised industries while the roads, which cater for all industries, are to be left starving? Is that what my hon. Friend has said?

Mr. Molson

No. If the hon. Baronet would do me the favour, of reading tomorrow what I have said, he will see that I have not said that. What I have said is this—that the total savings of the country are being absorbed each year and are being used by the Government, by local authorities, by industry and in other ways, and that any large additional demand upon the savings of the country, unless there is an increase in the savings of the people and institutions of the Country, can be met only at the expense of some of the purposes for which money is being borrowed at present.

Sir G. Braithwaite

Then the nationalised industries are to get the lot.

Mr. Molson

It is entirely a matter for consideration as to where priority is to be given. I have not understood any of the speeches today to complain about this. I read the hon. Baronet's speech on the occasion of the Gas and Electricity (Borrowing Powers) Bill, when he was at pains to say that he was not criticising the proposal to enable the electricity and gas industries to go forward with development which is urgently needed both for industry and for the domestic consumers of this country.

Viscount Hinchingbrooke

My hon. Friend has said something which is rather alarming to some of us. He has said that there is this very high level of employment, that the monetary resources of the nation are fully engaged and that roads will have to wait until the situation is better. That is the old-fashioned Runciman argument. Can he not hold out a hope to the House and to the country that, without giving priority attention to roads, a section of the general economic programme will forthwith be carved out for roads so that they can take their place beside the other enterprises which are going forward and expanding at such a rapid rate?

Mr. Molson

I give an immediate assurance that the Government consider carefully each year how the economic resources of the country should be allocated between different purposes.

It is quite obvious that the Government at the present time are sympathetic to the proposals that are being made for improving and developing our roads. It was because of that attitude on the part of the Government that my right hon. Friend was able to make the announcement he made on 8th December last year. As and when further resources became available, the Ministry of Transport will certainly see to it that the Government do not overlook the great claims which can be made on behalf of the roads.

Sir G. Braithwaite

In the meantime, £900 million goes to industry.

Mr. Molson

I was a little surprised that the hon. Member for Dorset, South dismissed rather airily the fact that the roads, unless they are toll roads, do not themselves bring in the money which is required to service a loan.

Viscount Hinchingbrooke

I suggested that they ought to.

Mr. Molson

They obviously do not bring it into the Exchequer, which would be responsible for servicing the loan. The argument of the hon. Member for Bristol, North-West was that the servicing of the loan would amount to only £30 million a year which would require only a comparatively small proportion of the existing petrol tax. But the petrol tax, which has been increased by Chancellors of the Exchequer of both parties, is one of the main sources of revenue required for the general expenditure of the country, and if it were proposed to add to the total of Government indebtedness in order to provide for a great extension of roads, it obviously would be necessary to increase the national revenue in order to service that loan.

Sir G. Braithwaite

My hon. Friend has made a provocative remark. Is he really asking the House to envisage that over the 30-year period of this loan the armaments programme will continue at its present momentum? We are looking ahead over a 30-year period; he is arguing for a period of six or 12 months.

Mr. Molson

No one is able to look a very long way ahead. All I can say is that there has never been a time since the end of the First World War when one could look ahead and feel confident that the revenue of this country was likely to increase more rapidly than the expenditure. I say, therefore, that if it were proposed to finance the building of roads out of a loan, it would be necessary for the Chancellor, in his Budget, to make provision for the servicing of the loan.

The only alternative would be if the motorists of this country had imposed upon them a special additional burden in order to cover the interest upon it. I am not in the least convinced that the motoring community would welcome anything of that kind. In the second place, I think that we are, generally speaking, agreed that it is objectionable that particular sources of revenue should be earmarked for special purposes.

So I say that, while there is no difference of principle which would make it at all times necessarily improper to finance the building of new roads from below the line, there is every reason to think that at the present time it would not be a wise or a good thing to do.

A number of interesting points have been raised today. The hon. Member for Enfield, East spoke about some of the special difficulties of London. He was good enough to say that he had not given me notice of those matters and that he would not expect an answer today. I will, however, look further into them. I am not wholly ignorant of them, but I will certainly not neglect that matter which, I realise, is one of ever-increasing urgency.

Mr. Ernest Davies

Many thanks.

Mr. Molson

I will also look into what my noble Friend the Member for Dorset, South said about the kerbing of roads. I happen to have been inquiring recently into the kerbing of roads, but from a rather different angle.

We in the Ministry of Transport welcome these ever recurring debates upon roads. No one who is at the Ministry can be ignorant of the great need for an improvement in the layout and size of our existing roads, and we accept the desirability of the building of new roads. During the period that this Government have been in office we can point to a very great expansion in our programme. The expansion that was announced on 8th December last year is now getting under way, and I do not despair that if the conditions of the country continue to improve as they have done during the last two and a half years, we shall be able to expand still further the road programme.